Challenger banking APPG calls for a new financial services Big Bang to drive Levelling-up
The APPG on challenger banks and building societies is today publishing its report on the role financial services can play in driving the levelling up agenda.
It highlights regulatory intransigence which holds back challenger institutions and stifling competition. Furthermore, the report finds that the major high street banks remain insulated from the forces of competition and an obsession with preventing failure among regulators has made it impossible for challenger institutions to complete with the major banks on a level playing field.
The report’s recommendations include using the current Financial Services Bill in Parliament to deliver a Financial Services Big Bang, to break the restrictive regulatory practices which enshrine the dominance and market share of the major high street banks.
It also calls for the breaking the chains of excessive regulation which disproportionately impact growing challenger institutions, and the levelling up of regulatory thresholds like MREL which are set far lower in the UK than elsewhere in the world and serve as a disincentive for growth and innovation.
The APPG recommends that the government takes steps to accelerate the growth of fintech and argues for better financial education in schools, at both primary and secondary school level to help people across the UK make better financial decisions.
Rt Hon Karen Bradley MP, chair of the APPG on challenger banks and building societies commented: “Levelling up is a key government priority and the current cost of living crisis only serves to reemphasise how important it is. Financial Services providers can play a big role, but overly cautious regulation is holding them back.
“Regulators fear of failure means many are forced to operate with one hand tied behind their back and this doesn’t have to be the case.
“Both Conservative leadership candidates have been clear that they want to make big, bold policy decisions. The recommendations outlined in this report are easy to implement within the current financial services Bill, are cost-neutral, and have the potential to deliver real and lasting change to communities across the UK.”
Dan Frumkin, CEO at Metro Bank, added: “Levelling-up must move beyond merely being a slogan, especially given the current tough economic climate. If done right, channelling fresh investment, finance and opportunity will change the fortunes of whole communities. Challenger banks and building societies, including community banks like Metro Bank, stand ready to play a significant role in this – yet our potential continues to be held back because rules and regulations aimed at de-risking the UK’s biggest banks actually prevent challengers from growing and shaking up banking for the better. I hope that this report kick-starts debate on improving these rules and opening the path to growth.”
